How Much Does it Cost to Produce a Recording?

An anonymous reader writes "How much does the average new album cost to produce? I have seen this cost estimated between $500,000 and $1,000,000, but some quick figuring does not support a cost this high. According to various sources (Ok, Slashdot stories...), somewhere around 27,000 albums are produced each year and 906.6 million albums are shipped. I would guess that the album retail (about $15 per album) is based on a 100% markup, so that these 906.6 million albums are sold at wholesale for about $7.50 apiece, which means that the revenue from wholesale sales is about $6.8 billion. This means that the actual production cost has to be less than $250,000 per album, otherwise the record industry is losing money. I have left out the cost of actually printing and copying the albums as I think that the average cost is probably less than $0.25 per copy."

Comments

250,000 is too much

[inepom01]

It's not NEARLY that much. The $15 price is not a 50% markup from what it costs to produce. There are distribution costs that you are forgetting. Making a CD is really not that expensive. It all depends on what kind of music and how much of their own recording the band does: you can record the whole thing in your apartment and just go to the studio to mix, which will lower your cost considerably. You can have your CD for about $4,000 probably. Why do your CDs cost $15? you are paying for the PR and everything... There's a whole pyramid of people between you and the artist. Also, 90% of bands never really make money so the remaining 10%, whose CDs you actually buy, have their CDs' prices jacked up.

Also, everything is getting cheaper. Things like mixing are moving towards being done on a less and less expensive PC. A Mac with ProTools can do a LOT these days.

Faulty premise

[Golias]

You are operating from a faulty premise, which is that the record label must recover their production costs from sales.

The truth is that most of the production costs are paid by the artist. With a new artist, the label fronts the money to produce the album, to be paid back out of artist royalties.

One of the big complaints of artists, which several prominent performers have pointed out before, is that they can almost never repay all of these costs from their first album, unless they are one of those rare acts which goes platinum with their debut. Most acts are then pressured to rush a second album, as cheaply as possible, to increase their revenue to pay off the production costs of the first album and get them into the black. (Hence, all those infamous "sophomore slump" albums.)

In other businesses, this practice is called "loan sharking", but it's the way the record industry has worked for decades, and there's no sign of stopping as long as this business model continues to work.

Depends...

[cornjchob]

the cost of an album depends considerably on what you're trying to do, and who you are. Assuming you're in a small band (like myself), an album will usually cost maybe $600 just to record and master, and then another $2000 for a good amount of copies in cd and tape. This doesn't add a lot of frills, especially in the recording process; not much can be done on a budget such as that, like studio musicians and really nice effects and what not. But then again, you could get a bunch of buddies to do anything special on your album, and that'll usually work. Or, you could do it with less quality for even less money, or record it at home. But for some professionalism, thats the way to go, and it'll usually run between $2000 to $3000.

For big business music, however, several thousand dollars are spent. The average is raised a lot due to how many effects and how much processing goes into making pop music. Britney doesn't hit that note? Touch it up with several thousand dollars worth of software (if you're legit ;) and special hardware and a technician that's expensive as hell. Plus, with all the processing, even more goes into it. Producers at that level are also hella expensive, further jacking up the price. And studio musicians are expensive as hell.

But the bottom line here is it depends on what you meant: Major recordings or a bunch of bumblefucks like myself on a budget.

Re:100%

[packeteer]

All of these numbers are insane anyway. I dont have the ability to check the actual numbers but i know from my economics classes that these seem unlikely. This is simply someone guessing about somehting they probably dont know much about.

Prod cost doesn't bother me a whole lot...

[NanoGator]

I don't really care how much the markup is on a CD. That's not an issue with me. If it costs them a penny a CD, and they sell it for $15, that doesn't bother me one bit. The truth of the matter is that they're charging what people are willing to pay, not based on what they actually cost to make.

What does bother me is their reluctance to satisfy me as a customer. If an album sucks, I want a refund. Forget it, open it == bought it. They don't even want me sampling the music to alleviate their no returns policy. The way I see it, if they're going to charge a premium for this crap, shouldn't I become a happy customer?

So yeah, they can charge what they want as long as I find the price reasonable, but I demand better customer satisfaction if they're getting such a ridiculous markup on it.

Faulty premise # 2

[Erris]

Don't confuse what someone spends doing something with the cost of getting something done. Money made by music lables funds things that have little to do with making music. "Promotion" is a vauge cost term added to contracts that can be anything and certianly includes Rosen's golden parachute. Courtney Love pointed out in her "numbers" essay. If a band makes any money at all, suddenly "promotion" costs come out of the woodwork. The Artist rarely makes more than $40k/year after expenses are taken out, while the publisher pockets millions.

The actual costs seem to be what this article has in mind. Most people know what it costs to press a CD and wonder how that $0.25 turns into $20. We also imagine that musicians already own their instruments and have something to record. As you seem to know so much about what's going on, could you detail some actual recording costs for us? Like, what does it cost to rent a studio? Where do we get this outrageous half a million dollar figure from?

Re:interestingly enough...

[geekee]

But did he make a profit? The RIAA needs to mitigate their risk by selling at a higher price since not every band they sign will be successful

It's way too expensive

[zmooc]

1000 cds kost about $800 to produce, booklet included. 7 days in your own studio costs nothing. Bandwidth for 1 average MP3 costs $0.03. CDs for $2.00 should already have been reality something like 35973 years ago. The same for MP3s for $0.10 a piece and $1.00 per album. Sell 50K albums and you get about $25. I think that's about the same for artists in the current system.
The system in which we all have to pay for way too expensive studios with way too much way too expensive managers which usually also produce a way too expensive videoclip and have a way too expensive team to think about what the next single from this or that album should be. All payed for by us. Well then we all have to pay for things like MTV, RIAA-tax, normal tax and the rest is income to artists. Some make multizillions a year but newcomers can hardly get on the market because of the marketing-machine all CD-buyers invest in. So I say once again: don't buy CD's from the big labels, don't record your album at the big labels. ANY band with a bit of a studio at home (cheap multitrackers work just) can record an album in a few days. Invest $800 in the first 1000 CD's and sell them online. Just send them out yourself - when the volume goes up, let somebody else do it for you.. ...but you'll never get through the marketing-wall the big labels have put up with the money of CD-buyers. The same wall that helped the region-code (or whatever it is) on the DVD, will help DRM to your PC and will help your money in their hands.

This is the wrong question

[smoondog]

This is the wrong question. The cost per album is really, really easy to calculate. It is the amount of money a record company spends over the number of albums they sell. The real question is what is the minimal cost to producing an album and why do they pay so much more? Well I think it is probably very much like drug companies (which I *do* know something about). Like drugs or potential drugs, there are probably things being produced that never become profitable. Albums that don't sell, but are paid for have to be included in this value. These are reasonable expenses. The, IMO, unreasonable ones are like the massive PR machine that tries to keep the status quo.

So you aren't asking the correct question. How much a single album costs is pretty much irrelevant to answering the real question you want the answer to.

-Sean

Nirvana's "Bleach" - $600

[sdo1]

The liner notes of Nirvana's first album Bleach says "Recorded in Seattle at Reciprocal Recording by Jack Endino for $600".

It's a great album. Captures everything they were about in their prime. It's not the best recording I've heard, but it's more than OK and I'm guessing the've made their $600 back.

But other forms of music require a bit more than a four track and a couple of cheap guitars. Into techno/electronic music? Expect to spend more $$$ getting that to sound right. Jazz can probably be done cheaply. Point and record is how the best sounding recordings are generally done.

IMO, any band that spends millions on recording is trying to get something that just isn't there. If you can't capture the essence of what your band is for far less money, then I suggest that the recording process is being used to hide the band's shortcomings.

-S

Re:Just a guess

[n9hmg]

the recording of nevermind
We're not talking about pure geek technical excellence at slider positioning. The subject is quality of album.
You ever hear "Frampton Comes Alive"?... No studio at all. While I'll be the first to admit that a good enough producer can almost single-handedly create a killer album (if he can choose his own studio musicians... Think "Tales of Mystery and Imagination"), the main thing you need to make a good album is good music played well. If you don't have that, you have........ well, you have what we seem to have now. Rap, "boy bands", Brittany Spears (I'm sure I'm spelling that wrong. I sure hope so, anyway.), or whatever overproduced, corporate-manufactured non-music they're trying to sell now. If the RIAA wants to see big sales, get Nick Mason to wake up Pete and Dave, and let's have another Pink Floyd album. Better yet, let's have somebody else start making music that good, as they need their sleep. The problem is that there was a huge rise in the importance of recorded, recognizable, repeatable music, which created a business model which brought in enormous profits. As other forms of entertainment reduced the demand for pure audio, the record companies who sprung up in that rich compost began trying harder and harder at the part of that business process that they can influence. It's a lot like the situation where your car starts to overheat, and loses power. As it happens, you can maintain speed by pushing the throttle pedal farther down. This, however, aggravates the overheating condition. We've got the same thing going on now. There are damn few new artists that command respect. Only the mindless ones want to be like "in sink" or Tiffany. It's not attracting real, intelligent, talented people any more, so all the record companies can do is crank harder on the publicity machine, and seek new income through fees on data storage media.
I'm sure that prior to the wide availibility of the automobile, there were some really incredible buggy whip companies, producing superlative whips, which could touch the horse in just the right way, making it excited to run, without causing it a trace of pain. I'll also bet that they did everything they could to survive after they were no longer needed. They're still gone, and we don't need them to come back. Back when producing and distributing an accurate copy of a piece of audio took a big business, the record companies served a very important purpose. Now, they are as important to music as buggy whips are to transportation. I really don't see why this is difficult for them to understand. I'm really sorry for the people who are no longer needed in their jobs, but there are still a few really excellent telegraphers out there (really... I've met one), who had to find something else to do. Sadly enough, I'm beginning to think that that fate is already coming around for unix system administrators. Anybody need a really good one?

Re:Just a guess

[schlach]

the main thing you need to make a good album is good music played well. If you don't have that, you have........ well, you have what we seem to have now. Rap, "boy bands", Brittany Spears (I'm sure I'm spelling that wrong. I sure hope so, anyway.), or whatever overproduced, corporate-manufactured non-music they're trying to sell now.

You know, I used to have the same problem. For about eight years, I mourned the death of Classic Rock. New music was crap, and I wouldn't listen to it. When Cobain killed himself, I was glad I could add Nirvana to my Classic Rock staples (Foo Fighters still suck). I eagerly anticipated Rage's breakup so that I could put them in my collection, too.

If I could quote a sage who once remarked to me,

"But then everything around me
got to start to feeling so low.
So I decided quickly
to disco down and check out the show.

They were dancing!
And singing!
And moving to the groovin!
And just when it hit me, somebody turned around and shouted, "Play that funky music, white boy!"

Now first it wasn't easy,
changing rock and rollin' minds.
Things were getting shakey -
I thought I'd have to leave it behind.

But now it's so much better, so much better.
I'm funkin' out in every way!
But I'll never lose that feeling,
of how I learned my lesson that day."

Play That Funky Music - Wild Cherry

The reason, I think, for the suckage of new pop-consumption music is that it is without soul. And I think 'consumption' is a good name, because it wasn't written for the intrinsic joy that creating music brings artists - it was written for popular consumption to bring studios money. If you want soul, you have to find out what the kids are doing, and the kids are, and always have been, on the dance floor. In the sixties it was rock and roll, in the seventies it was disco and funk, the eighties was european techno (read: eighties disco), the nineties were electronica (read: nineties disco), and it's still going strong. The new music that I like these days, I hear from DJs on the dance floor, and that would blow the mind of someone who hasn't seen me since I was exclusively a Classic Rock bigot.

Find the kids, and you'll find the music with soul. (If you're hearing Britney Spears, you've traveled back in time to a 1999 Rec dance full of teenyboppers. Try again. =)

Oh, and OT in my own post, an interesting thing to chart is the correspondence between different drug use and different music. In a completely unscientific way, I associate disco with cocaine, classic rock with heroin, and electronica with everything else. =) (Everyone's drinking and smoking, so I don't include that.) So the question is, does the music dictate the drugs, or do the drugs dictate the music?